Economic
Systems
Monday 10/26/15
Economic
Questions
What to
produce?
How to produce?
Who gets what is
produced?
There are four primary types of economic systems in the world:
-Traditional
-Command
-Market
-Mixed
Traditional Economy
The most traditional and ancient type of economy
Produce products and services that are a direct result of their
beliefs, customs, traditions, religion, etc.
men, women, & children have specific roles/tasks
Those who still practice: rural, second or third world
countries, and closely tied to the land, usually through
farming.
Traditional Economies
Examples:
Asia
Africa
South America
Middle East
Economic Systems
Command
Market
Government
manages all or or
most resources &
industries
vs
No government
involvement. Resources
are distributed by supply
& demand.
Command Economy
Economic activity is planned by the government with very
little influence of its citizens.
Government decided how talents
and skills are used.
Command Economies
Government sets prices
No unemployment
Not concerned with citizens wants
Command Economies
1. Communism
a. Govt owns all factors of production and
decides how sources should be used
2. Socialism
a. Govt controls critical industries , but
individuals can run non-critical businesses.
Communism
Example: Business man wants to open a coffee shop, buys land to open
business
He can’t do this b/c government controls all the factors of
production; makes all decisions which businesses are going to operat.
-Government determines how factors of production get utilized
-Government owns all resources
-NO individual ownership
Communism
All property is owned collectively
Central planning
Labor is controlled
NO private ownership
Equal Pay
Communism
Another Example:
You want to cut down a tree in your yard to use as firewood to heat your house for
winter.
That is illegal under Communism.
Why?
That tree belongs to all the people; as does your house.
Communism
Government decides how many farmers there needs to be;
how many employees are needed to work in a factory; who
can be a teacher.
They control Labor (work)
Socialism
Govt owns and runs some basic production resources so they are distributed in the
best interest of society
-They provide jobs to citizens
You may chose to run/operate your own business
Example: You can be a musician if that is your talent.
Members of society, get an EQUAL amount of what society produces.
Most Socialist societies are Democracies!
Socialism
Elected officials determine the best use of resources
Fascism
-Combination of private
ownership (capitalism) and
government control of
resources (communism)
-Organized into
corporations or estates
regulated by government.
Fascism
Private ownership by
Fascist Party
Generally associated with
a war time economy
Market Economy
Government is NOT involved. People and businesses act in their own best interest
Resources are owned and controlled by individuals.
Resources are distributed based on supply and demand.
Private ownership of everything.
Market Economy
-Economic decisions made
those willing to take the risk.
-Individual freedom is
considered very important
-Resources are used based
on supply and demand.
Market Economy
Examples:
You want to open a coffee shop, you can do so, as long as you have the $/capital,
and/or you are able to pay loans.
You want to cut the tree down in your yard for firewood, you are allowed to do so.
Mixed Economy
Government and individuals
share decisions
Some govt regulation
Some private ownership
Mixed Economy
Utilities
Water
Garbage
Schools
Mixed Economy
A Mixed Economy primarily refers to a mixture of a Market and Command economy
Mixed Economy
United States & Canada are examples
Video
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